Loan disbursements through agent banking rise 48.60% YoY in September

Loan disbursements through agent banking surged 48.60% year-on-year, reaching Tk21,089.81 crore at the end of September, on the back of improved access to finance for rural people, according to Bangladesh Bank data.

In September last year, loan disbursements stood at Tk14,192.65 crore.

As of 30 September, 31 banks offered agent banking services through 21,367 outlets operated by 16,011 agents. The number of accounts opened through agent banking reached 23,489,109 of which 11,704,846 accounts (49.83%) belong to female customers and 20,173,995 accounts (85.89%) belong to the customers of the rural areas.

At the end of September 2024, the amount of deposit accumulated in the agent banking accounts is Tk39,529.37 crore and the cumulative amount of inward remittances disbursed through agents reached Tk1,65,659.23 crore.

Bankers observed that with the gradual expansion of agent banking, many people who were previously excluded from banking services at the rural level can now easily avail the services themselves, which is the key reason behind the increased flow of such loans.

Talking to BSS, a senior official of the central bank said agent banking is playing a pivotal role in providing adequate financial services, especially for rural women, small business entrepreneurs and beneficiary of remitters.

Considering the fact of loan deposit ratio and the portion of lending to women or entrepreneurs, he said, Bangladesh Bank is constantly encouraging banks to facilitate CMSME, women entrepreneurship loan and some refinance schemes for marginal people through agent banking.

Overall, agent banking is having a significant positive impact on financial inclusion and, therefore, has the potential to fill up the market gap created by the insufficient outreach of branch banking, he added.

Abdul Quaium Chowdhury, deputy managing director of Premier Bank PLC, said that the rising trend of agent banking, especially in rural areas, indicates that there is a remarkable potential to bring the rural unbanked people under the umbrella of formal banking services.

He said the rise in the number of customers in the banking system is due to the expansion of new services of the banks.

Moreover, agent banking is flourishing because of the efforts of banks to provide services at the grassroots through agent banking, he added.

In the future, he said, agent banking will become more popular.

Besides, he said, many banks have started offering small loans through agent banking, due to which the number of loans are increasing.

Bangladesh Bank introduced agent banking in Bangladesh in 2013 with a view to providing a safe alternate delivery channel of banking services. The targeted customers of this service were the under-served population who generally live in geographically remote locations that are hard to reach by the formal banking networks.

Customers can avail various banking services including deposits, loans, overseas and local remittances, payment services (such as utility bills, taxes), and receiving government social safety-net benefits through agent banking outlets.

This model is thus gaining popularity as a cost-effective and convenient delivery channel to the mass people who would otherwise have remained beyond the reach of conventional banking services.

Banks are operating their agent banking activities in line with the Prudential Guidelines for Agent Banking Operation in Bangladesh, issued by Bangladesh Bank on 18 September 2017, covering various aspects including the agent approval process, permissible activities, responsibilities of the banks and the agents.

It also focuses on the requirements for anti-money laundering and combating financing of terrorism (AML/CFT), and customer protection and business continuity to facilitate safe and effective proliferation of agent banking in the country.